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Release No: 175-95April 05, 1995

DEPARTMENT OF DEFENSE ESTABLISHES GUIDELINES FOR NEW COST OF LIVING ALLOWANCE

The Department of Defense today released details of CONUS COLA, a program to
supplement the income of servicemembers who live in high-cost areas in the
continental United States (CONUS). It provides a cost of living allowance
(COLA) for non-housing costs. The variable housing allowance already
supplements housing costs.

CONUS COLA is a key element of the quality of life initiatives supported by
Secretary of Defense William Perry. The Department of Defense intends to
implement the CONUS COLA program on July 1, 1995. Individuals living in areas
where the non-housing cost of living exceeds the national average by more than
nine percent will receive a CONUS COLA allowance. The amount of the allowance
will be determined by the area's cost of living in relation to the national
average, the military member's spendable income, and dependent family members.
Spendable income is the total amount of regular military compensation available
for purchase of goods and services after allocation of amounts for taxes,
insurance, housing, gifts and other contributions, and savings. $20.8 million
is budgeted for CONUS COLA in FY1996.

Approximately 32,000 servicemembers will receive a CONUS COLA. The average
monthly benefit per member is $45, but varies depending on grade, location and
family size. For example, a married E-6 with 10 years of service living in New
York City will receive $120 a month, while that same servicemember if stationed
in Los Angeles would get a COLA of $20 a month.

There are 20 military housing areas and 67 smaller non-military locations with
cost of living indexes that exceed the nine percent threshhold. Approximately
31, 750 members reside in the military housing areas; an additional 250 reside
in the 67 smaller locations.

Assistant Secretary of Defense (Force Management) Fred Pang has submitted a
report to Congress which describes the CONUS COLA program in more detail,
including a list of eligible areas and corresponding cost of living amounts.
The report is available to the news media in the Directorate for Defense
Information, Room 2E765, the Pentagon.